Stanford professor David Mazières thinks he has a faster, more flexible and more secure alternative to Bitcoin, MIT Technology Review reports.
Two independent reviewers, from Stanford and Cornell universities, agree that the new technology could make digital payments and other transactions cheaper, safer and easier.
Alternative blockchains are often dismissed as worthless “me-too” copycats or scamcoins, which, unfortunately, has some element of truth. But Mazières’ approach deserves a place among the serious alternatives to Bitcoin that have been proposed, alongside Ethereum and Ripple.
Public digital currency ledgers rely on distributed consensus protocols to propagate valid transactions. In the Bitcoin network, independent nodes (miners) work together without preferential trust relations. In other words, each node implicitly trusts every other node.
In the new protocol, called Stellar Consensus Protocol (SCP), each node explicitly selects a set of publicly trusted peers, and forwards only the transactions that have been validated by a certain majority of its trusted partners.
If correctly implemented with a critical mass of nodes with overlapping trust circles, valid transactions propagate in ripples through the network and eventually achieve systemwide consensus.
“Bitcoin is good, but we wanted to start from scratch,” says Mazières. He is persuaded that the SCP can overcome important limitations of Bitcoin, such as the long confirmation delays and the fact that mining is now a very energy-intensive process. The new system would be able to reliably verify transactions much more quickly and with less energy, and provide enhanced scalability.
Mazières’ protocol has been adopted by Stellar (hence the name SCP), an open-source protocol for value exchange, launched in 2014 by Ripple Labs founder Jed McCaleb (who also founded the infamous Mt.Gox exchange), and backed, among others, by payment processor Stripe. Besides bitcoin payments, Stellar supports fiat currency payments, for example in euros or U.S. dollars, via Stellar exchanges and gateways.
Initially, Stellar used the Ripple protocol, which also requires nodes to identify a set of trusted nodes to achieve a rippling effect across overlapping trust circles. But a fork in the network prompted Stellar to take steps to build a new consensus protocol, which resulted in the SCP. Ripple maintains that its consensus network is not vulnerable to the issue encountered by Stellar.
Mazières is taking leave from Stanford to work four days a week on the project as Stellar’s chief scientist.
The SCP whitepaper, titled “The Stellar Consensus Protocol: A Federated Model for Internet-Level Consensus,” is available online on the Stellar website. The whitepaper is a technical paper not easy to understand for casual readers, and therefore Stellar has provided a readable summary.
The SCP implements “Federated Byzantine Agreement,” a new approach to achieving consensus in a real-world network that includes faulty “Byzantine” nodes with technical errors or malicious intent. To tolerate Byzantine failures, SCP is designed not to require unanimous consent from the complete set of nodes for the system to reach agreement, and to tolerate nodes that lie or send incorrect messages.
In the SCP, individual nodes decide which other participants they trust for information, and partially validate transactions based on individual “quorum slices.” The systemwide quorums for valid transactions result from the individual quorum decisions by individual nodes.
According to Stellar, the SCP is the first provably safe consensus mechanism that simultaneously enjoys four key properties: decentralized control, low latency, flexible trust and asymptotic security. The SCP achieves optimal resilience against ill-behaved participants, allowing an organic growth model similar to that of the Internet for the Stellar network.
Image via stellar.org.
Giulio Prisco is a writer specialized in science, technology and business. He is persuaded that Bitcoin and its underlying technology are about to bring disruptive positive changes to finance, business, and society.